Q4. (20 marks)

Date of purchase March 31, 2020

Capital cost $200,000

Estimated useful life 10 years

Estimated residual value $20,000

CCA Class Class 10 (30%)

The company uses straight-line depreciation to the nearest month for accounting purposes.

Instructions

1)what is the CCA for calendar 2020. (Show calculations.)

2) Assuming the UCC for this machine is $83,300. The company sells the machine on January 2, 2020 for $90,000, and does not replace it. The recapture of CCA or terminal loss would be?

3) Differentiate the impact of CCA versus Straight-line on the asset for the company in this question.